Don't Get "Pre-Qualified"... Get "Pre-Approved"

Price is an important bargaining chip in the negotiation of buying a home however; it is not necessarily the most important one. Often other terms, such as the strength of the buyer or the length of escrow, are critical factors to a seller.

In the past many real estate agents recommended that buyers get "pre-qualified" by a lending institution. More importantly I believe that it is essential that buyers know the difference between "pre-qualified" and "pre-approved". Pre-approval these days can be done on the phone by information that you supply lenders and are based on your income and your expenses. Many lending institutions and mortgage brokers will even issue certificates that you are pre-qualified. Many buyers believe that they are now armed with a powerful negotiating tool however, educated sellers know better. Why? Well pre-approval are normally based on unverified information without full credit checks and other glitches that you might not even be aware of. The bottom line is that most of these certificates are really worthless.

On the other hand a buyer armed with an actual loan approval with only loose ends like appraisals and title searches is a powerful negotiating tool for your agent. This process takes anywhere from a few days to a few weeks depending on your situation. I recommend this to all my clients to have this powerful tool in their arsenal.

Additionally, I suggest that buyers should be encouraged to shop for the best total loan package available ahead of time and with a reputable loan officer or mortgage broker. Buyers often go after the lowest rates advertised in the newspapers and often disappointed with the many miscellaneous fees and length of time it takes to close. When working with real estate professional they could be a valuable source for obtaining the best package that is currently out there. An excellent recommendation from a real estate professional goes a long way towards helping the loan officer or mortgage broker to go that extra mile for the buyer. Hard work always pays big dividends!